Lanier v. Merck, Round 2, Post 18

The jury returned a verdict in the New Jersey Vioxx trial yesterday afternoon.

The jury found that Merck had failed to warn the men about the risks of heart attack and stroke associated with Vioxx but found a causal link between the drug and a heart attack for only one plaintiff.

McDarby, who said he used the drug for four years, was awarded $3.0 million. His wife was awarded $1.5 million.

Cona, who said he used the drug for 22 months (the extent of his use was severely challenged), received no compensatory damages because the jury did not find the causal link between the use of Vioxx and his heart attack.

The jury also found that Merck engaged in consumer fraud and awarded each man the cost he paid for his medications.

Mark Lanier represented Cona, the man who lost the causation argument but who won $45 for the amount he paid for Vioxx. (Cona argued that he received most of his Vioxx in the form of free samples. Either the jury did not believe him or believed that his heart attack was caused the one or more of his risk factors.)

The jury returns today to hear proof about the claim for punitive damages.

Read more here.

My thoughts:

1. This verdict is extremely bad news for Merck. Merck was playing on its home court (it is based in New Jersey) and a home court loss sends a terrible message to the rest of the country.

2. Worse yet for Merck, the verdict demonstrates that that a jury can sort through the facts of the causation testimony of at least two plaintiffs and reach different results on each. Recall that Merck argued that a jury would get confused if two cases were tried at the same time. If both plaintiffs had won Merck would have argued that the jury was confused and there should be no consolidated trials in the future. If both plaintiffs had lost Merck would have argued the the jury was brilliant but that trials should not be consolidated in the future because the risk of confusion was too great. The split verdict on causation shows that the jury was able to consider the evidence on causation for the two men seperately and, apparently, rationally. Look for more trials with multiple plaintiffs. In fact, look for trials with three or four plaintiffs (maybe more) in New Jersey state court.

3. The compensatory damages award appears within the range of reason. McDarby suffered not only a heart attack but also a received a broken hip when he fell. He is in a wheelchair. The apparent reasonableness of the award is bad for Merck in the court of public opinion.

4. The finding of consumer fraud is extremely significant. Under the New Jersey Consumer Fraud Act, “the act, use or employment by any person of any unconscionable commercial practice, deception or fraud, false pretense, false promise or misrepresentation, or the knowing concealment, suppression or omission of any material fact with the intent that others rely upon such concealment, suppression or omission, in connection with the sale or advertisement of any merchandise . . . is declared to be an unlawful practice…” Treble damages, attorneys’ fees and costs are recoverable damages. First, the fact of the finding is horrible for Merck from a customer relations standpoint. Perhaps more important, however, is that there is a class action pending against Merck on this very subject seeking a recovery of the prescription price of the drug for every buyer in America (and perhaps beyond). The damages in that case are over $10 billion. The intermediate court of appeals in New Jersey recently upheld class certification in that case (read my post here). Question: is offensive collateral estoppel available to the class action participants because of the jury’s finding in this case? I do not know what New Jersey law is on this subject, but if collateral estopple does apply Merck is going to be in a very tough situation. Sure, it can appeal this verdict and drag things out a few years. But if the verdict is affirmed it will take a huge hit in the class action.

5. Once again, the possibility of recovery of attorneys’ fee is very significant, not only in the class action but in every other case. Why? Until the class action is resolved (and even after it is resolve, if the consumer opts out of the settlement) a personal injury or wrongful death plaintiff can include a claim for violation of a consumer protection act and may be able to recover expenses and fees even if the case is later lost on causation. And don’t forget about trebling….

5. The punitive damage phase could prove troublesome to Merck, too. Punitive damages in New Jersey are capped at five times the punitive damages award. In McDarby, punitives would be capped at $22.5 million. That is certainly not chump change, but nor is it so outrageous (like the result in Texas) that Merck will get postive PR out of a loss on this issue.

6. These cases will continue to be defended on a case-by-case basis for the time-being. It appears that juries will need solid proof on actual consumption of the drug (they won’t just take the plaintiff’s word for it – there better be some documentation that the medication was actually received by the plaintiff, by free samples or purchase)- and that consumers who took the drug for longer periods of time are better plaintiffs than those who took it for a shorter period of time. That is of no particular surprise to almost anyone who has followed this controversy. Click here for a timeline of relevant events to date.

7. I do not forsee any settlements in these cases for months, perhaps a year or more. Even the cases with documented use for 18 or more months will not be settled because Merck has to hope that they get a few victories that will bring the value of those cases down. (Of course, a string of losses in cases with 18 more months of documented use will bring values up – but at least publicly Merck seems to be saying “Thank you, sir, may I have another?” Look for the trial judge in New Jersey to push more cases to trial – recall that she set four or five groups of cases for trial this year and that all of the cases were long-term consumption cases.

8. Plaintiffs lawyers should not get overly excited by this result and start filing a bunch of short-term use cases. No short-term use case has been won. The next of those cases will probably be tried in New Orleans which is probably not a favorable venue in the short-term.